Low birth rate, high potential business

The company launched its photo sharing platform in December of 2012, and subsequently started printing and delivering photo postcards and photobooks last year. So far Kiddy has acquired 50,000 households (or families) as users and over 3 million photo and comment entries on the platform. The company’s founder and CEO Hiromichi Ando explained a little more about the funding this time around:

CEO Hiromichi Ando

Our service allows users to deliver printed postcards or photobooks to as many as three different locations. We learned that many customers chose three locations, typically printing photos of their children and delivering them to both sets of grandparents. As for the photobooks, we are providing a premium version (3,100 yen per photo book, excluding shipping) using silver-halide prints in addition to the lower priced offering (1,550 yen per book). The premium option is costly, but it’s selling well. Grandparents want to see how their grandchildren are growing even if they live far away. This motivation helps us increase our sales per customer.

In a low-birth rate society like Japan, it is said that every child has six money streams, if you count parents and grandparents. This concept helps the company be more profitable despite the fact that its user base is not as much as is typically needed for monetization.

Becoming an information platform

The startup intends to shift its platform from family photo storage to a comprehensive information platform where users learn what others family members are doing in their daily lives. Ando explained:

Three or four family members are typically connected to each other on our platform. A couple may divorce or remarry after having their child, so we’ll add a feature that allows users to control privacy about their photo or messages.

He plans to use these latest funds to hire new people and enhance the platform’s features. They are currently a four-person team, but they’ll add a COO and several engineers to accelerate system development efforts.

Global expansion

So far the company has about 20% of users, or about 10,000 families, accessing Kiddy from outside Japan. Considering this demand, they have to think about the internationalization of the platform. Ando explained how they will address the problem:

International shipping has been available only for postcards but not for our photo album products. But considering that as many as 20% of users are from outside Japan, we asked our printing and shipping companies to enable international shipping of photo album products, starting in the first week of June. Shipping charges will be higher than domestic delivery, but I think there’s a huge demand from users out there.

The service is currently available in English and Japanese. But in order to better serve its global user base, they will add French and German interfaces this July. The company has already exhibited and presented at several startup conferences in Europe, such as LeWeb in Paris and WebSummit in Dublin. Ando feels that these promotional activities has helped them build brand awareness in those regions.

In this space we’ve already seen many competitors, including Kazoc, Nicori, BabyDays, Ikumemo, and Wellnote (See this article for details). But Kiddy fares better than these competitors on the App Store in terms of number of reviews and average rating.

Moving forward Kiddy will focus on improving user satisfaction, with the end goal of having the top market share in Japan and the rest of the world. They hope to surpass a million households worldwide by the end of 2015.

Open Network Lab is the incubation arm of Japanese internet company Digital Garage. DG Incubation is the startup-focused investment arm of Digital Garage. The investment arm of NetPrice.com has been rebranded to Beenos. ↩

Masaru started his career as a programmer/engineer, and previously co-founded several system integration companies and consulting firms. He’s been traveling around Silicon Valley and Asia exploring the IT industry, and he also curates event updates for the Tokyo edition of Startup Digest.